You are considering new elliptical trainers and you feelyou can sell 4000 of the

You are considering new elliptical trainers and you feelyou can sell 4000 of these per year for 5 years (after which timethis project is expected to shut down). The elliptical trainerswould sell for $1200 each and have a variable cost of $550 each.The annual fixed costs associated with production would be$1300000. In addition there would be a $5500000 initialexpenditure associated with the purchase of new productionequipment. It is assumed that this initial expenditure will bedepreciated using the simplified straight-line method down to zeroover 5 years. This project will also require a one-time initialinvestment of $1100000 in net working capital associated withinventory and that working capital investment will be recoveredwhen the project is shut down. Finally assume that the firmsmarginal tax rate is 35 percent